Claims processing capabilities within the automobile insurance segment is not unlike a car itself-hitting on all cylinders is essential to ensure high performance.In 1999, Mayfield Village, Ohio-based Progressive Insurance Co. debuted TotalPro, a Web-based claims processing application that can be activated by both internal affiliates and Progressive policyholders.

Today's insurance marketplace is anything but "business as usual." Competition from new market entrants, deregulation, and fast-changing consumer expectations are challenging insurers' historically risk-averse corporate cultures.Traditional strategies and processes will not be successful in this market. To succeed, insurers must develop new business strategies and apply new technologies that will support business transformation.

As insurers' expectations for e-commerce revenue tumbled over the past couple years, e-business spending has focused on self-service initiatives such as enterprise portals and agent extranets. But most insurers lack the infrastructure and customer understanding to maximize the return on these and other technology investments, such as customer relationship management.Therefore, insurers need to create financial services hubs: technology platforms for delivering services that span multiple systems.

With the insurance industry, one moment of impact-whether it's two vans, two workers or two ships-can initiate a lengthy reporting trail weighed down by paper handling and delays. The first notice of loss, which carriers receive from agents by phone, fax, or Internet, starts the trail.

Despite the slow economy and overall reductions in IT spending since 2000, U.S. insurance companies are continuing to increase their technology spending. That's according to a June report from Celent Communications, a Boston-based research and consulting firm.Budgets for 2002 are an average of 7% higher this year than last year-totaling $18 billion industrywide, according to the report, titled "IT Spending in U.S. Insurance."

The information technology initiative that Toronto-based Manulife Financial Corp. and IBM Corp. announced in April is receiving its fair share of scrutiny within the insurance community due to several wide-ranging implications.

Insurers are discovering that strategic outsourcing ventures performed overseas can provide a great deal of mileage when it comes to capturing significant long-term efficiencies.Those that have launched offshore endeavors have found that establishing a presence outside the U.S. with information technology and business process outsourcing possesses a greater degree of leverage for a couple of reasons. From a labor standpoint, the cost of doing business outside the U.S. is far less expensive, and the savings can be passed along to the client.

Most IT purchasing decisions made by insurance companies put careers on the line. Don't start a project until the costs and payback can be reasonably defined.The insurance industry has been exposed to much hype about new technologies. I believe executives should avoid this urge to jump on the next technology bandwagon.

Even though claims service provided by property/casualty insurance carriers represents a major factor in their ability to retain customers and attract new ones, insurers are not providing the level of service that is considered acceptable to corporate customers and consumers, two new studies conclude.Moreover, even well-capitalized carriers that possess the financial stability to support quality claims service appear to be dropping the ball.

Over the past few years, many financial services providers have struggled to automate their operations across the enterprise. For most, the task of extracting data that resides in antiquated legacy systems and seamlessly linking these systems across various business units has proved to be nothing short of rocket science.

After spending the past several years sitting on the sidelines, mid-size insurance companies are poised to break out of their IT spending inertia.In a report titled "Technology Market Snapshot: Mid-Size Insurance Companies," Boston-based Celent Communications Inc. estimates that mid-size insurers-those with direct written premiums between $100 million and $1 billion-will spend $1.1 billion on new technology projects over the next three to five years, primarily on Web-enabled policy administration systems and agent extranets.

Bob Lucas isn't your typical insurance company CIO. For starters, he has been with one company-The Hartford-for 30 years. What's more, he's a business administration major who was hired right out of college by the Hartford, Conn.-based financial services firm.

Northwestern Mutual's IT philosophy is right out of Aesop's Fables. By applying the strategy of the tortoise and its slow and steady approach, this insurance giant with $92 billion in assets and annual revenues of $15.4 billion gets the most bang for its information technology buck.The Milwaukee-based company has to be careful how it uses technology because it can't jeopardize its shining reputation. This year, it was voted the "most admired" life insurance company for the 19th year in a row in a Fortune magazine survey. And, it ranks as the nation's best in customer satisfaction among all financial services studied, according to a Wall Street Journal 2001 report.

Environmentalists should be happy about the new document scanning and imaging system at Prudential Group Insurance-because it's saving a lot of trees. The insurer's disability insurance customers should be pleased too-because it's enabling the company to process their claims more quickly.What had been a manual, paper-intensive process of receiving disability claim documents via fax machine or mail has been replaced by a nearly paperless operation.

Insurance is an important component of modern economic life. The logical outcome of the millions of policies in force today is a proportional number of claims to pay for covered losses.From an operational cost and policyholder perspective, the claims handling process is the heart of property/casualty insurance. It's true that performing risk analysis, selling policies and retaining customers are important issues for carriers.

The outsourcing of information technology is proving to be popular with carriers these days, reversing the industry's historical apprehension of working with third parties. But experts caution that time will tell how widespread the concept becomes.In January, PacifiCare Health Systems Inc. became the latest insurer to chart this course by completing a 10-year, $1.2 billion venture with Armonk, N.Y.-based IBM Corp. and Boston-based Keane Inc.

Insurers have invested significant amounts of capital on technology based on the belief that those investments will improve their top- and bottom-line performance. However, new research indicates that carriers are experiencing mixed results to date and they're seeking refined metrics to measure how technology is impacting their operations.Those are some of the conclusions of a recent survey of 248 North American financial services firms conducted by Tillinghast-Towers Perrin. The survey is the second in a series of industry studies conducted by the management and actuarial consulting firm intended to learn how new technologies are impacting carriers' performance, and how carriers are measuring the success of IT implementations.

It's easy to define what manufacturers produce and sell. Toy makers make toys. Auto manufacturers make cars. Pharmaceutical companies make drugs. But what do insurance companies do?

When Florida Combined Life decided to become a primary player in the dental PPO and fee-for-service business in that state, it had two major challenges: an aggressive timeline and an inflexible claims system.The Jacksonville, Fla.-based subsidiary of Blue Cross Blue Shield of Florida had been offering dental coverage as an ancillary product to its health insurance offerings, and it had been paying dental claims through its health claims system. But that system was inflexible, and would not meet the company's future needs, says Charles Brody, dental division vice president at Florida Combined Life.

Five years ago, Security Insurance Co. was suffocating under the weight of paper files. The company's file room was packed to the point where the company had to place file racks in hallways, consuming office space that cost $20 per square foot.Space constraints weren't the only problems that the Alpharetta, Ga.-based carrier's paper filing system created. Call center representatives had to put customers on hold and ask a file room clerk to retrieve the caller's file just to answer routine questions. Moreover, only one person at a time could work on a customer's file during the underwriting process, a situation that didn't foster high worker productivity.